Student Loan Help

Nearly everyone would agree that a student should start with financial aid process with scholarships and Federal loans. But in this age of significant inflation in education, that often isn’t enough to cover tuition, room and board, books, etc. And some parents would prefer their children to take on more of the responsibility for paying their education. To meet these needs, both for-profit and not-for-profit lenders have significantly increased the availability of private (sometimes called alternative) student loans.

Unlike Federal loans, private loans are not guarenteed, so the lender is taking on more risk that the student may default. Therefore, these loans are more expensive that Federal loans (hence, why students should max out on Federal loans before applying for private loans). Despite their higher cost, private loans have grown on average 25% a year over the last five years and are expected to continue their very strong growth.

While no FAFSA is required for private loans, the lenders will look at your credit score and credit history to determine the risk associated with lending you money. As many students don’t have much of a credit history (or if they do, a very high credit score), it is important to have a credit-worthy co-signer on the loans. A credit-worthy co-signer will significantly increase the odds of your private loan application being approved.=

Many of these lenders offer up to $30,000-40,000 annually, capped at the cost of attendence minus other financial aid. These loans typically have a 10-30 year term depending on amount. They also have flexible repayment options, including 1) immediate repayment, 2) immediate payment of interest-only (defer principle), 3) or ability to defer both interest and principle while in school.

Undergraduates interested in private loans can learn more at www.acteducationloans.com.

Graduate students should visit www.gradloans.com for grad-specific private loans.